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Xie Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two types of go-karts: Deluxe and Basic.  Activity Expected Costs Expected Activity Handling materials $ 625,000     100,000 parts Inspecting product   900,000     1,500 batches Processing purchase orders   105,000     700 orders Paying suppliers   175,000     500 invoices Insuring the factory   300,000     40,000 square feet Designing packaging   75,000     2 models    Assume that the following information is available for the company’s two products for the first quarter of 2017.    Deluxe Model Basic Model Production volume 10,000 units 30,000 units Parts required 20,000 parts 30,000 parts Batches made 250 batches 100 batches Purchase orders 50 orders 20 orders Invoices 50 invoices 10 invoices Space occupied 10,000 sq. ft. 7,000 sq. ft Models 1 model 1 model     Required:Compute activity rates for each activity and assign overhead costs to each product model using activity-based costing (ABC). What is the overhead cost per unit of each model? (Round activity rate answers to 2 decimal places.)

Xie Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two types of go-karts: Deluxe and Basic.  Activity Expected Costs Expected Activity Handling materials $ 625,000     100,000 parts Inspecting product   900,000     1,500 batches Processing purchase orders   105,000     700 orders Paying suppliers   175,000     500 invoices Insuring the factory   300,000     40,000 square feet Designing packaging   75,000     2 models    Assume that the following information is available for the company’s two products for the first quarter of 2017.    Deluxe Model Basic Model Production volume 10,000 units 30,000 units Parts required 20,000 parts 30,000 parts Batches made 250 batches 100 batches Purchase orders 50 orders 20 orders Invoices 50 invoices 10 invoices Space occupied 10,000 sq. ft. 7,000 sq. ft Models 1 model 1 model     Required:Compute activity rates for each activity and assign overhead costs to each product model using activity-based costing (ABC). What is the overhead cost per unit of each model? (Round activity rate answers to 2 decimal places.)

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 27E: Plata Company has identified the following overhead activities, costs, and activity drivers for the...
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Xie Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two types of go-karts: Deluxe and Basic.
 

Activity Expected Costs Expected Activity
Handling materials $ 625,000     100,000 parts
Inspecting product   900,000     1,500 batches
Processing purchase orders   105,000     700 orders
Paying suppliers   175,000     500 invoices
Insuring the factory   300,000     40,000 square feet
Designing packaging   75,000     2 models
 

 
Assume that the following information is available for the company’s two products for the first quarter of 2017.
 

  Deluxe Model Basic Model
Production volume 10,000 units 30,000 units
Parts required 20,000 parts 30,000 parts
Batches made 250 batches 100 batches
Purchase orders 50 orders 20 orders
Invoices 50 invoices 10 invoices
Space occupied 10,000 sq. ft. 7,000 sq. ft
Models 1 model 1 model
 

  
Required:
Compute activity rates for each activity and assign overhead costs to each product model using activity-based costing (ABC). What is the overhead cost per unit of each model? (Round activity rate answers to 2 decimal places.)
 

 
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